Judge: Melvin D. Sandvig, Case: 23CHCV00781, Date: 2025-04-01 Tentative Ruling

Case Number: 23CHCV00781    Hearing Date: April 1, 2025    Dept: F47

Dept. F47

Date: 4/1/25                                                      TRIAL DATE: 12/8/25

Case #22CHCV00781

 

SUMMARY JUDGMENT/SUMMARY ADJUDICATION

 

Motion filed on 12/17/24.

 

MOVING PARTY: Defendant Fire Insurance Exchange

RESPONDING PARTY: Plaintiffs Josef Vardeh and Helen M. Vardeh

NOTICE: ok

 

RELIEF REQUESTED: An order granting summary judgment, or in the alternative, for summary adjudication in favor of Defendant Fire Insurance Exchange and against Plaintiffs Josef Vardeh and Helen M. Vardeh on their First Amended Complaint. 

 

RULING: The motion is denied in its entirety.

 

SUMMARY OF FACTS & PROCEDURAL HISTORY

 

This action arises out of water damage to Plaintiffs Josef Vardeh and Helen M. Vardeh’s (Plaintiffs) condominium when an upstairs neighbor’s water heater leaked.  Plaintiffs made a claim to their insurer, Defendant Fire Insurance Exchange (Fire) for damages related to the leak.  Fire accepted the claim.  Although Fire has made payments under the applicable policy, Plaintiffs claim that Fire has failed to pay all amounts due and has unreasonably delayed payment of the full amount Plaintiffs claim is due under the policy. 

 

Plaintiffs operative First Amended Complaint alleges the following causes of action against Fire: (1) Breach of Contract, (2) Breach of Implied Covenant of Good Faith and Fair Dealing, (3) Violation of Business & Professions Code 17200, (4) Negligence and (5) Negligent Infliction of Emotional Distress.  Plaintiffs also make a claim for punitive damages in relation to their 2nd cause of action for Breach of the Implied Covenant of Good Faith and Fair Dealing. 

 

On 12/17/24, Fire filed and served the instant motion for summary judgment in favor of Fire and  against Plaintiffs on their First Amended Complaint.  Alternatively, Fire seeks summary adjudication in its favor and against Plaintiff on each cause of action alleged in the First Amended Complaint and/or on Plaintiffs’ claim for punitive damages.  The hearing on the motion was originally scheduled for 3/14/25.  On 2/14/25, the Court issued a Notice Re: Continuance and Order continuing the hearing date from 3/14/25 to 4/1/25.  (See 2/14/25 Notice Re: Continuance & Order).  Additionally, the Court ordered all oppositions and replies were due pursuant to the 3/14/25 hearing date.  Id.

 

On 2/24/25, Plaintiffs filed and served an opposition to the motion.  Even without considering the Court’s 2/14/25 order that the reply was due pursuant to the original 3/14/25 hearing date, a reply pursuant to the 4/1/25 hearing date was due on or before 3/21/25 (11 days before the 4/1/25 hearing date).  CCP 437c(b)(4).  As of the morning of 3/27/25, Fire has not filed a reply to the opposition.

 

ANALYSIS

 

A defendant may move for summary judgment if it contends that the action has no merit.  CCP 437c(a)(1).  A defendant may move for summary adjudication, separately or in the alternative to summary judgment, as to one or more causes of action within the action, one or more claims of damages or issues of duty, if the defendant contends that the cause of action has no merit, there is no merit to a claim for punitive damages or that the defendant did not owe a duty to the plaintiffs.  CCP 437c(f).  A cause of action has no merit if one or more elements of the cause of action cannot be separately established or if the defendant establishes an affirmative defense to that cause of action.  CCP 437c(o).  A defendant has met its burden of showing that a cause of action has no merit if the defendant has shown that one or more elements of the cause of action, even if not separately pleaded, cannot be established, or that there is a complete defense to the cause of action.  CCP 437c(p)(2).  Once the defendant has met that burden, the burden shifts to the plaintiff to show that a triable issue of one or more material facts exists as to the cause of action or a defense thereto.  Id.

 

In ruling on a motion for summary judgment and/or summary adjudication, the court must liberally construe the evidence offered in opposition to the motion while strictly construing the evidence offered by the moving party.  See D’Amico (1974) 11 C3d 1, 21; Binder (1999) 75 CA4th 832, 839.

 

1st cause of action – Breach of Contract

 

The elements of a breach of contract cause of action are: (1) the contract, (2) plaintiff’s performance or excuse for nonperformance, (3) defendant’s breach and (4) resulting damages to plaintiff.  See Reichert (1968) 68 C2d 822, 830; San Diego Housing Commission (1998) 68 CA4th 526, 536.

 

An insurance company has a duty to conduct a prompt and adequate investigation of an insured’s claim.  See Shade Foods, Inc. (2000) 78 CA4th 847, 879; McCormick (1984) 153 CA3d 1030, 1048; Waller (1995) 11 C4th 1, 36.

 

“An agent is one who represents another, called the principal, in dealings with third persons. Such representation is called agency.”  Civil Code 2295.  A principal is vicariously liable for the acts of an agent committed in the course of employment.  Lathrop (2004) 114 CA4th 1412, 1421; Civil Code 2338.  The existence of an agency relationship and the scope of the agent’s authority are usually questions of fact, unless the facts can be viewed only one way.  Metropolitan Life Insurance Co. (1982) 32 C3d 649, 658. 

 

As part of their breach of contract cause of action, Plaintiffs allege that Fire assigned Defendant Service Master Fire and Water Restoration by Apex, LLC (Apex) to perform the necessary remediation of the property and that in doing so, Apex caused Plaintiffs to incur damage.  (See First Amended Complaint (FAC) ¶¶5, 48-49).  Fire argues that Apex’s services cannot be construed as a breach by Fire because such acts are not Fire’s acts; Fire did not hire Apex; Apex is not a party to the policy; and Apex was acting as Plaintiffs’ agent, not Fire’s agent.  (See Motion, p.9:26-p.10:13).  However, Fire concedes that its adjusters did not personally inspect the Property.  (Separate Statement (SS) 15, 71).  Instead, Fire relied on outside experts, including Apex to adjust Plaintiffs’ claim.  (SS 16, 72). 

 

Based on the foregoing, the Court finds that, minimally, a triable question of material fact exists as to whether Apex (and/or the other experts relied on by Fire to adjust Plaintiffs’ claim) was acting as Fire’s agent with regard to Plaintiffs’ claim and/or whether Apex’s conduct breached Fire’s obligations under the policy causing Plaintiffs’ to suffer damages which were not paid for by Fire.      

 

2nd cause of action – Breach of Implied Covenant of Good Faith and Fair Dealing

 

To establish a claim for breach of the implied covenant of good faith and fair dealing, an insured must establish: (1) benefits were due under the policy and (2) the benefits were withheld without proper cause.  Love (1990) 221 CA3d 1136, 1151; Benavides (2006) 136 CA4th 1241, 1250.  The reasonableness of an insurer’s claims handling conduct is usually a question of fact and only becomes a question of law where the evidence is undisputed and only one inference can be drawn from the evidence.  Carlton (1994) 30 CA4th 1450, 1456.

 

Fire contends that it cannot be liable for breach of the implied covenant/bad faith because it paid all benefits owed and acted reasonably.  However, as noted above in relation to the breach of contract cause of action, a triable issue of material fact exists as to whether Fire has paid all insurance benefits owed.  Similarly, a triable issue of material fact exists as to whether Fire acted reasonably in relying on outside experts to conduct its required investigation of Plaintiffs’ claim under the circumstances and/or deny additional payment under the policy.

 

3rd cause of action – Violation of Business & Professions Code 17200, et seq. (Unfair Competition)

 

California’s Unfair Competition Law  (UCL) prohibits “any unlawful, unfair, or fraudulent business act or practice.”  See Business & Professions Code 17200, et seq.  Such claims may be brought “by a person who has suffered injury in fact and has lost money or property as a result of  the unfair competition.”  Business & Professions Code 17204.

 

With regard to Plaintiffs’ unfair competition law cause of action, Fire argues that the claim fails because it “merely recasts” and/or relies on the same facts as Plaintiffs’ other causes of action and because those claims fail so does the unfair competition law cause of action.  (See Motion, p.17:1-11).  As noted above and below, triable issues of material fact exist as to Fire’s liability on Plaintiffs’ breach of contract, breach of implied covenant of good faith and fair dealing and negligence claims. 

 

4th cause of action – Negligence & 5th cause of action – Negligent Infliction of Emotional Distress

 

Fire addresses the 4th and 5th causes of action together.  (See Motion, p.17:12-p.18:18).

 

While negligence is generally not among the theories of recovery available against insurers, an insurer may be held liable for negligence under certain circumstances (i.e.,  damages caused by the negligent hiring of counsel to defend an insured).  See Sanchez (1999) 72 CA4th 249, 254; Merritt (1973) 34 CA3d 858, 882.  The Court finds that a triable issue of material fact exists as to whether Fire acted negligently in relying on “other experts,” including Apex, to conduct the investigation of Plaintiffs’ claim.  In the event that such conduct is not found to be a breach of the insurance policy and covered under the 1st cause of action, Plaintiffs are entitled to rely on an alternative negligence theory of recovery.  Similarly, as noted above, a triable issue of material fact exists as to whether Fire is vicariously liable for any negligent conduct by Apex.      

 

Punitive Damages

 

Plaintiffs request punitive damages in relation to their 2nd cause of action for breach of the implied covenant of good faith and fair dealing.  (See FAC, p.14:13-14).  A claim for punitive damages is allowed where oppression, fraud or malice exists.  See Civil Code 3294.  As against a corporation, a plaintiff must prove the oppression, fraud, or malice was “on the part of an officer, director or managing agent of the corporation.”  Civil Code 3294(b).

 

Fire merely concludes that acts of bad faith allegedly committed by Fire do not amount to clear and convincing evidence of oppression, fraud or malice because Fire’s claim handling was reasonable.  However, as noted above, triable issues of material facts exist as to whether Fire handled Plaintiffs’ claim reasonably.  Additionally, a triable issue of material fact exists as to whether an officer, director or managing agent of Fire is guilty of fraud, oppression or malice as Fire concedes it was its policy at the time not to have its adjusters personally investigate claims.

 

CONCLUSION

 

The request for summary judgment and the alternative request for summary judgment are denied.